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Investment builds in new student housing

2016 is set to become the second highest year on record for investment in the UK purpose-built student accommodation sector (PBSA), according to the latest research just released by Cushman & Wakefield, with the total expected to reach £3.1bn.

The Cushman & Wakefield report shows that demand for student accommodation remains strong, with more students in the system than ever before. 1.7m are now studying full-time, an increase of 0.4% from the previous year. And, despite intensive development in some areas, the ratio of students seeking a purpose-built bed has also increased.

The latest figures that the national student-to-bed ratio has now risen from an average of 2.1 to 2.3 students per bed space, and as competition builds it would seem rents in the sector have also risen, by an average of 2.7% in comparison to 2015.

The report also highlights that the geographical focus of investment throughout 2016 has been in the regions, with the proportion of transactions in London falling by approximately two thirds. This shift away from England’s capital city has made way for another of the UK’s capitals.

Edinburgh is the UK’s most educated city with a significant amount of students staying to work in the city after qualifying. Around 55% of the Edinburgh workforce hold a university degree or equivalent. And with 4 universities and over 58,000 students living and working in the city, demand for accommodation that meets student rising requirements continues to outstrip supply.

“The most recent statistics present an extremely positive outlook for PBSA in the New Year and with that Edinburgh is quickly emerging as the desirable location for investment in the sector,” said Oliver Ramsden, Director of Aspen Woolf. “The QS World University Rankings 2016/17 have placed the University of Edinburgh 19th in the world, ensuring that student numbers will continue to grow heightening the need for quality student accommodation.

“Investing in property in Scotland offers the additional advantage of freehold ownership, as opposed to leasehold opportunities south of the border, providing longevity and a sense of security. This is a huge benefit for investors, as it makes it considerably easier to sell a property onwards.”